Some 2020 Dems want a ‘wealth tax’ – what you should know
The measure has drawn support from 2020 candidate and Massachusetts Sen. Elizabeth Warren along with a group of wealthy Americans, including Abigail Disney and George Soros.
But what exactly is it?
As opposed to taxes levied on income and payrolls, a wealth tax would target the value of accumulated assets owned by rich Americans – or their net worth.
The idea, generally, is to combat growing economic inequality, creating a more level playing field among the wealthy and middle classes by adjusting the tax system.
The U.S. has never had one, and proponents would likely be faced with legal obstacles before they could implement one.
Here’s how some argue it could be difficult to enforce: It would require the determination of the value of things like art, jewelry, real estate holdings, business ownership stakes, etc., on a continual basis. The estate tax is considered a wealth tax, however it’s only assessed once during a person’s lifetime.
Critics also point to unintended consequences of implementing a wealth tax – including the fact that rich individuals often use their wealth to create jobs and income. It might also cause the wealthy to leave the U.S., taking their tax revenue elsewhere.
Wealth taxes have been dropped by a number of countries due in part to how difficult they are to administer, from 12 in 1990 to just 3 today.
Warren, a 2020 presidential hopeful, proposed an “ultra-millionaire tax,” which would apply to those with more than $50 million in assets. The tax would be equal to 2 percent, but would rise to 3 percent for those who have assets valued at more than $1 billion.
But it’s not just politicians who want a wealth tax. Earlier this year, a group of wealthy individuals, including financier George Soros, penned an open letter to 2020 presidential hopefuls asking for “a moderate wealth tax on the fortunes” of the richest one-tenth of the top 1 percent of Americans. They want the revenue to be used to address climate change and to improve health care and education.
One 2020 candidate who is no fan of the tax? Former Maryland Rep. John Delaney, who questioned the constitutionality of wealth taxes during an interview with FOX Business.
“The reason I’m not in favor is because I don’t think it’s constitutional,” Delaney told FOX Business’ David Asman. “And the countries that have had it have largely backed away from it, because it’s almost impossible to implement and enforce.”
While the 16th amendment allows for the direct taxation of income without apportionment among the states, there are questions about whether a wealth tax is constitutional – which experts largely agree would depend on the specific form it takes.